The US Economic Downturn causes a net Outflow of Foreign Cash In The Philippines
The Inquirer.net is reporting that according to the Philippine Central Bank there has been a large outflow of foreign investment for the year. This is mostly from foreign investors converting their Peso into their native currency.
For the January-September period, foreign portfolio investments registered a net outflow of $487.52 million, in sharp contrast to a net inflow of $3.4 billion in the same period last year.
There are many causes for this but large investors need dollars. Banks in the US refusing to make loans with the impending recession slows the creation of dollars. It would appear that other currencies are in demand as well.
This should continue to push the value of the dollar up. It is another indication that demand for the dollar is out stripping the supply. Basic high school capitalism at work is at work. For the average expat, this means a continued increase in your pensions spending power. As of this writing, the dollar has finally cracked the P48 to $1.00 mark.
Our gain is likely at the expense of the Filipino and putting more strain on a developing country and hampering its growth. As a consumer spending your dollars, in the form of Peso is helpful. While for most of us, its a little bit at a time but when you add all the expats and tourist together it is a significant amount. If you can afford a few peso, please consider donating to education and feeding the hungry and homeless in the Philippines. We should certainly give back to our host country.
There has been a turn around of 3.8 billion over the course of this year and we can only assume the dollar makes up a significant part of that. If it does not, then the dollar could take a plunge. I will research these number and try to find out more information.
Filed under: Expat Finances
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